Artemether, a lipid-soluble derivative of artemisinin has been reported to possess anti-inflammatory properties. In this study, we have investigated the molecular mechanisms involved in the inhibition of neuroinflammation by the drug. The effects of artemether on neuroinflammation-mediated HT22 neuronal toxicity were also investigated in a BV2 microglia/HT22 neuron co-culture. To investigate effects on neuroinflammation, we used LPS-stimulated BV2 microglia treated with artemether (5–40 μM) for 24 h. ELISAs and western blotting were used to detect pro-inflammatory cytokines, nitric oxide, prostaglandin E2 (PGE2), inducible nitric oxide synthase (iNOS), cyclooxygenase (COX)-2 and microsomal prostaglandin E synthase-1 (mPGES-1). Beta-site amyloid precursor protein cleaving enzyme 1 (BACE-1) activity and Aβ levels were measured with ELISA kits. Protein levels of targets in nuclear factor kappa B (NF-κB) and p38 mitogen-activated protein kinase (MAPK) signalling, as well as heme oxygenase-1 (HO-1), NQO1 and nuclear factor-erythroid 2-related factor 2 (Nrf2) were also measured with western blot. NF-κB binding to the DNA was investigated using electrophoretic mobility shift assays (EMSA). 3-(4,5-dimethylthiazol-2-yl)-2,5-diphenyl tetrazolium bromide (MTT), DNA fragmentation and reactive oxygen species (ROS) assays in BV2-HT22 neuronal co-culture were used to evaluate the effects of artemether on neuroinflammation-induced neuronal death. The role of Nrf2 in the anti-inflammatory activity of artemether was investigated in BV2 cells transfected with Nrf2 siRNA. Artemether significantly suppressed pro-inflammatory mediators (NO/iNOS, PGE2/COX-2/mPGES-1, tumour necrosis factor-alpha (TNFα) and interleukin (IL)-6); Aβ and BACE-1 in BV2 cells following LPS stimulation. These effects of artemether were shown to be mediated through inhibition of NF-κB and p38 MAPK signalling. Artemether produced increased levels of HO-1, NQO1 and GSH in BV2 microglia. The drug activated Nrf2 activity by increasing nuclear translocation of Nrf2 and its binding to antioxidant response elements in BV2 cells. Transfection of BV2 microglia with Nrf2 siRNA resulted in the loss of both anti-inflammatory and neuroprotective activities of artemether. We conclude that artemether induces Nrf2 expression and suggest that Nrf2 mediates the anti-inflammatory effect of artemether in BV2 microglia. Our results suggest that this drug has a therapeutic potential in neurodegenerative disorders.